Backyard poultry farming has been inevitable part of sustainable livelihood of Indian farmers. It provides not only food security but also employment to the farmers and rural youth. Hilly areas, especially the north-eastern states of India are still growing in terms of commercial poultry production yet they have considerable experience in traditional backyard poultry husbandry. There has been a common practice to use indigenous breeds in backyard poultry but these days improved chicken breeds are introduced in farming. Native breeds have been used due to their ability to withstand harsh climatic conditions, good survivability but they are poor and slow producers of egg and meat. Several apex institutions in this field have evolved improved breeds which have got characteristics of both native as well as that of high and quick producing strains. The factors that play crucial role in inhibiting and proliferation of backyard poultry husbandry may determine the success of backyard poultry in a particular region. This review covers works which are done in this field and aims at suggesting key points for improved backyard poultry production for sustainable rural development with a special focus over the important works done in rural hilly areas.